China’s Controversial Belt and Road Initiative Finds a New Ally in Europe

China has called on Hungary to increase its participation in the Belt and Road Initiative. However, experts suggest that Beijing’s support for Russia and the rise of pro-Western sentiments in Europe have dampened the continent’s enthusiasm for the global infrastructure program, even if Budapest intensifies its commitments. During his visit to Budapest on Monday, China’s chief diplomat Wang Yi informed Hungarian trade and foreign affairs minister Peter Szijjarto that China was prepared to “enhance their cooperation in constructing the belt and road projects to a new degree,” according to the state-run Xinhua News Agency.

Wang had previously suggested to the self-proclaimed “illiberal” Prime Minister Viktor Orban the day before that the two nations should “further increase high-quality collaboration” in belt-and-road work, as per Xinhua. Following Wang’s trip, the foreign minister expressed his optimism for future collaboration and called his country a top destination for Chinese investment, which amounts to more than $1 billion every year.

President Xi Jinping’s Belt and Road Initiative aims to enhance China’s economic integration and influence around the globe via infrastructure projects valued at over US$1 trillion. Since its launch a decade ago, cooperation documents have been signed with 149 nations. Hungary joined in 2015 and became the largest recipient of Chinese outbound direct investment in Eastern Europe, receiving a total of US$571 million.

Hungary’s Prime Minister Viktor Orban sees the plan as a way of opening up new Asian markets for the country’s exports. The chief project under the initiative is a 350km high-speed railway to Serbia worth US$1.9 billion. Xinhua reported that Hungary is committed to participating in the plan and speeding up the construction of the Hungary-Serbia railway. However, there is uncertainty as to whether the country will approve of additional projects, and recent Facebook posts by its foreign minister, Peter Szijjarto, did not convey any clear signals.

“The world is being divided into two blocs again. I don’t think there is much of a future for the belt and road in the pro-Western countries, though China would like to have both camps in the fold,” said Chen Zhiwu, a finance professor at the University of Hong Kong. Many European leaders are critical of China’s refusal to condemn Russia or impose sanctions against Moscow over the Ukrainian conflict.

During his visit to Europe last week, Wang Yi, the Chinese foreign minister, had to defend China’s stance and support a peaceful resolution to the conflict. On Tuesday, Wang reached Moscow for a series of meetings. “With the war in Ukraine, China’s increasingly close ties to Russia are likely to make other countries in Eastern Europe less eager to do business with China,” said Andrew Collier, a China economist with Global Source Partners in Hong Kong.

Beijing’s pressure on Taiwan and Hong Kong, along with trade and technology disputes with the US since 2018, have also tarnished China’s reputation in Europe. Supply chains have become segmented, with Europe mostly preferring Western channels for components such as semiconductor chips.

According to Alexander Vuving, a professor at the Daniel K. Inouye Asia-Pacific Centre for Security Studies in Hawaii, most European countries are now more cautious of China than before. They are scrutinizing Belt and Road Initiative projects through a new lens of strategic competition, replacing the previous perspective of globalization.

Criticism has been leveled at the belt and road strategy for causing environmental damage, such as Chinese-sponsored coal plants, and has led to allegations of debt-trap diplomacy, where countries are entrapped with loans they cannot afford to repay. These accusations have been refuted by China. Alicia Garcia Herrero, the Asia-Pacific chief economist at Natixis Corporate & Investment Banking in Hong Kong, stated that China and Europe have not usually discussed the Belt and Road Initiative.

Leaders from the Group of 7 summits, including Canada, France, Germany, Italy, Japan, Britain, and the United States, have agreed to introduce the Build Back Better World initiative in 2021. European leaders and their political parties have temporarily sidelined the Belt and Road Initiative due to US concerns over China’s links with Russia, according to Zhao Xijun, an associate dean with the School of Finance at Renmin University in Beijing.

Zhao added that they are not currently prioritizing economic development matters, and are instead focused on safeguarding their political positions. However, they will reconsider China’s initiative when economic development and “people’s livelihoods” become more important again in the future.

News Source: scmp

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